‘Hot money’ outflow hits fourth straight month in June

Short term portfolio investments continued their exodus from the Philippine financial system for the fourth consecutive month in June as fund managers cashed in on their assets and sent home earnings from stock market and fixed income investments during the period.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said that net outflow of so-called hot money amounted to $35 million for June — a substantial improvement from the $750-million in net outflow in May.

All told, local financial markets have seen a net outflow of $721 million in the first half of 2019, which was nearly double the net outflow recorded during the same period in 2018.

The BSP attributed the smaller outflow of hot money to improved domestic inflation data for May 2019 which is within the government’s target of 2-4 percent; the resumption of trade talks between US and China at the recently held G20 meeting in Japan and possible interest rate cuts by the US Federal Reserve.

Total BSP-registered investments for the month of June amounted to $1.4 billion, reflecting a 14.1 percent increase from the $1.2 billion figure recorded in May.

At least 73.6 percent of investments registered in June were in Philippine Stock Exchange-listed securities, mainly of property companies, holding firms, banks, food, beverage and tobacco companies and telecommunication firms. Another 26.4 percent went to peso-denominated government securities.

The United Kingdom, Malaysia, Singapore, the US and Hong Kong were the top five investor countries for June with combined share to total at 82.2 percent.

Outflow for the month of June was $1.4 billion lower compared to the level recorded in May 2019 of $2 billion. At least 69 percent of fhe money was sent back to the US.

June 2019 transactions yielded net outflow of $36 million. By instrument, transactions in peso government securities yielded net inflow of $104 million, while net outflow was recorded for transactions in PSE-listed securities ($139 million); and other peso debt instruments and other portfolio instruments, each at less than $1 million.

Year-on-year, a 55.0 percent increase in gross inflow was noted from the $911 million level recorded in Jine 2018. Similarly, gross outflow was slightly higher than that recorded for June 2018 ($1.43 billion or by 1.4 percent). On the other hand, net outflow for June 2019 decreased compared to the net outflow of $516 million noted for June 2018./TSB